Forty-five employees to lose their jobs in cost-cutting move at Boston Children’s Hospital

Forty-five workers will lose their jobs as part of a retrenchment at Boston Children’s Hospital, which has been working to cut costs while maintaining the quality of its pediatric care amid accelerating changes in the Massachusetts health care marketplace.

In all, the Harvard-affiliated hospital is eliminating 255 positions, about 2.6 percent of its 9,600 jobs, according to a memo sent to employees Wednesday by Children’s chief executive James Mandell and president Sandra Fenwick.

Some of those positions are now vacant, while other employees are being reassigned to take on new functions, the memo said, limiting the number of layoffs at the Boston medical center. The job cuts include both management and non-management positions, the executives said.

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“How and where Boston Children’s Hospital delivers care has changed significantly over the last decade,” Mandell and Fenwick wrote. “The shift of volume from inpatient care to outpatient care is one example. The relocation of care to our satellites and community hospital settings is another. And volume erosion as payers direct patients to our lower-cost competitors is a third.”

Children’s has been moving aggressively to reduce expenses over the past two years since it was identified by state Attorney General Martha Coakley as one of the most expensive hospitals in Massachusetts. Among other moves, it has cut fees to private health insurers and Medicaid managed care programs by lowering charges for lab tests, doctors appointments, imaging, surgery, and hospital admissions. The hospital has also reduced prices at its three suburban sites.

At a series of meetings last fall, Children’s executives issued a “strategic call to action” aimed at tackling the high cost of health care, according to Wednesday’s memo. It was based on a need to trim $150 million from the hospital’s fiscal 2013 budget. Thus far, the memo said, the hospital has identified $89.5 million in cuts and must still save another $50 million to $60 million.

Boston Children’s Hospital posted a profit of $82 million in fiscal year 2011, among the highest profits of any medical center in the state, according to the most recent financial performance report issued by the state Department of Health Care Finance and Policy. But the pressure on hospitals to reduce their health care prices has intensified during the past two years.

“These market pressures represent the concerns of many stakeholders in the health care system—our patients and families, referring physicians, employers, payers (insurance companies and Medicaid) and our state government,” the executives said in their memo.

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